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It may not sound like it makes sense for an insurance agent to narrow their target market, or niche. According to the latest Future One Agency Universe Study over half (54%) of independent insurance agencies don’t specialize in any specific industry. However, specialization can actually be extremely beneficial to insurance agents, allowing them to focus their efforts and become experts in their chosen niche. Here are the three main advantages of specialization for commercial agents, as well as the key disadvantages.
1. Reducing the Amount of Competition
Yes, specialization can reduce the eligible pool of clients, but it also reduces the amount of competition within the agent’s chosen industry. For example, an agent has a lot of experience and knowledge in the technology industry, and they decide to primarily focus on selling insurance within that area. Suddenly, they go from being one of 20 independent insurance agencies in their city to one of three that are specifically technology-focused. Marketing becomes simpler, and clients are more likely to seek them out when looking for industry-focused coverage.
2. Stronger Relationships with Clients
Focusing primarily in one particular niche allows agents to precisely address the needs of a distinct type of client and then follow up by delivering exactly what they require. Intimate knowledge of a specific trade allows agents to ensure their clients are securing comprehensive coverage. In some cases, agents may be able to offer information about industry-related risks that their clients and potential clients weren’t even aware of. This expert-level knowledge builds trust with existing clients and allows agents to maintain stronger relationships with them, increasing the likelihood of future referrals.
3. Greater Longevity for Agents and Clients
The time and effort put into becoming an expert in one specific industry can pay off in the long term. Offering expert-level risk management to clients benefits both parties. Clients are more likely to be successful, giving agents a reliable source of income for as long as they continue to provide their services.
Disadvantages of Specialization
It’s important not to discount the disadvantages of specialization too. Some industries can be more of a risk for agents to take on, and some markets can be extremely volatile, so it’s important for agents to do extensive research before focusing in one area. Agents may be able to balance this out by choosing two or three very similar industries that they can switch between depending on which market is strongest at a given time.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (877) 426-2866.